While the beer industry is experiencing a global downturn, Dutch beer company Heineken is showcasing resilience and continues to eye growth in Vietnam. Despite challenges, the company is on par with its global peers, maintaining a focus on reinvestments, such as the new brewery in Vung Tau. For the rest of the year, the prediction is for ‘stable to mid-single-digit’ growth in operating profit.
A sales slump in the traditionally prosperous region of Asia Pacific led to a 9% dip in Heineken’s profit in the first half of this year. The decrease was particularly felt in Vietnam, where beer sales dropped by 13% compared to last year. Nevertheless, Heineken stays undeterred, driving innovation to attract more Vietnamese customers with unique offerings like a South Korean-inspired soju-infused beer.
This drive aligns with the potential for growth in Vietnam’s dynamic and fast-evolving market. The World Bank notes the nation’s resilience during the COVID-19 pandemic and forecasts a 6.8% economic growth for 2023, presenting a favorable landscape for companies like Heineken.
The company’s downturn wasn’t exclusive to Vietnam. Socioeconomic unrest in Nigeria also contributed to the overall decline, with these two nations accounting for over half of Heineken’s total drop in the past six months.
In response to the extraordinary increases in commodity and energy costs, Heineken has judiciously adjusted its prices. Although this might have influenced some consumer choices, the company saw a revenue uplift of 6.3% in the first half of this year, underlining its robust market position. While inflation made its mark, Heineken utilized this opportunity to reinvest in its business, further cementing its long-term vision and growth.
While navigating the Russian market exit amidst political unrest, Heineken still operates seven breweries there. The company is progressing towards selling its Russian business, with the deal pending regulatory approval.
These times might be challenging for Heineken and many large corporations, but the focus is on the horizon – a brighter 2024. As companies navigate the current headwinds, they continue to plan and prepare for an upturn, with Heineken leading the way through strategic growth and investment.